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Mid-Term 3
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Key Concepts:
Terms in this set (70)
The daily balance is the previous balance plus cash advances plus purchases less any payments.
true
The APR represents the:
True effective annual rate of interest charged by seller
The finance charge is equal to the total of all monthly payments:
Less amount financed
The amount financed equals the cash price plus down payment.
false
Al Ree bought a new delivery truck for $18,000. Al put a down payment of $4,000 and paid $270 monthly for 60 months. The total finance charge:
$2,200
The Fair Credit and Charge Card Disclosure Act of 1988 is optional advice to credit card companies.
false
The U.S. Rule can be applied to open credit payments.
true
Ruth Sloan bought a new car for $20,000. She put down $6,000 and paid $280 for 60 months. The total finance charge to Ruth is:
$2,800
The average daily balance is the same as the daily balance.
false
The average daily balance is equal to the sum of daily balances:
Divided by number of days in billing cycle
Which one of the following statements is incorrect?
The Truth in Lending Act regulates interest charges
Most companies calculate the finance charge on credit card accounts as a percentage of the:
Average daily balance
The Truth in Lending Act requires the APR be accurately stated to nearest 1/4 of 1 percent
true
Average daily balance is equal to sum of daily balances divided by number of days in the billing cycle.
true
The APR represents the stated interest rate.
false
APR cannot by calculated by use of tables.
false
Jackie Flynn bought a new boat for $16,000. She put a $3,000 down payment on it. The bank's loan was for 60 months. Finance charges totaled $4,800. Her monthly payment is:
$296.67
A billing cycle is always 30 or 31 days.
false
Revolving charge accounts must be completely paid off by end of the month.
false
Given the following:
29 day billing cycle
4/17 Billing date previous balance: $1,055
4/25 Payment: 600
4/29 Charge: 200
5/8 Payment: 100
The average daily balance is:
$710.17
Graduated payments result in the borrower paying:
Less at beginning of mortgage
Bill's monthly payment is $1,056 per month. The principal is $100,000 at a rate of 12 1/2 percent for 35 years. The amount of interest for Bill's 1st payment is $1,011.67.
false
Marsha Terban bought a home for $119,000 with a down payment of $19,000. Her rate of interest is 12 1/2 percent for 35 years. The balance of mortgage at end of 1st month is approximately:
$99,985.67
The reduction of principal each month is equal to the payment less the interest.
true
Home equity loans are not tax deductible.
false
The amount of down payment one makes on a home directly affects the size of the monthly payment.
true
The total cost of interest on a home purchased for $200,000 with 30 percent down at 7 percent for 35 years is approximately $235,732.
true
The bi-weekly mortgage results in 6 extra payments per year.
false
Jane Smate bought a home for $180,000. She put down 20 percent. The mortgage is at 7 percent for 25 years. By using the r Excel, her monthly payment is approximately:
$1,018.08
Bill Moore took out an $80,000 mortgage on a ski chalet. The bank charged 4 points at closing. The points in dollars cost Bill:
$3,200
Interest rates on mortgages do not vary from bank to bank.
false
Fred borrows money to finance the purchase a home. During the first year of his payback, the major portion of the monthly payment is used to pay off the principal.
false
A variable rate mortgage means:
The interest rate is not fixed
Abe Aster bought a new spit level for $200,000. Abe put down 30 percent. Assuming a rate of 11 1/2 percent on a 30 year mortgage Abe's monthly payment is approximately: (Use the table in the handbook or Excel)
$1,387.40
Jill Diamond bought a home for $190,000 with a down payment of $65,000. The rate of interest was 7 percent for 35 years. Her monthly mortgage payment is approximately:
$798.75
A monthly payment of $850 on a 30 year $80,000 mortgage results in a total cost of interest of $226,000.
true
All mortgages must be paid monthly.
false
John Smith has a $120,000 7 percent mortgage. His monthly payment is $848.40. His first payment will reduce the principal to an outstanding balance of:
$119,851.60
Points represent:
An additional cost of receiving the mortgage
A point is 1 percent of the amount of the loan.
true
Interest is not calculated in ordinary annuities.
false
Present value of an annuity looks from the present to the future.
false
There is only one class of annuities.
false
Annuities can be done manually or by computer.
true
Insurance companies do not use annuities.
false
Sinking funds utilize the concept of compound interest.
true
How much money we need to invest in the future to receive a stream of payments in the present is called the present value of an ordinary annuity.
false
The maturity value in compounding is like the value of an annuity.
true
Companies that plan to retire bonds in the future could utilize sinking funds.
true
Ordinary annuity payments are made:
at end of period
In an ordinary annuity the interest on a yearly investment starts building interest:
at end of 1st period
An annuity is:
a stream of payments
Annuities certain have a specific stated number of payments.
true
Annuity due compared to ordinary annuity results in a:
higher value
Sinking funds accumulate money in the present to accumulate a specific sum at a predetermined present date.
false
Payments in annuities must be made:
none of the above
The same table can be used to find value of annuity due if 2 extra periods are added along with the subtraction of one payment.
false
An ordinary annuity results in the deposit or payment being made at end of the period.
true
Maturity value is equal to principal plus interest.
true
Annuity due payments are made:
at end of period
Lt. Dan is a shrimp fisherman, and he had asked you to help him determine the average pounds of shrimp he caught for selected days during the month of November. He reported the following:
11/1 7500 lbs
11/5 8900 lbs
11/8 5400 lbs
11/15 6800 lbs
11/18 8900 lbs
11/25 9500 lbs
11/28 4200 lbs
7314
Lt. Dan is a shrimp fisherman, and he had asked you to help him determine the median pounds of shrimp he caught for selected days during the month of November. He reported the following:
11/1 7500 lbs
11/5 8900 lbs
11/8 5400 lbs
11/15 6800 lbs
11/18 8900 lbs
11/25 9500 lbs
11/28 4200 lbs
What is the approximate median catch for November?
7500
Lt. Dan is a shrimp fisherman, and he had asked you to help him determine the maximum pounds of shrimp he caught for selected days during the month of November. He reported the following:
11/1 7500 lbs
11/5 8900 lbs
11/8 5400 lbs
11/15 6800 lbs
11/18 8900 lbs
11/25 9500 lbs
11/28 4200 lbs
What is the maximum catch for November?
9500
Lt. Dan is a shrimp fisherman, and he had asked you to help him determine the minimum pounds of shrimp he caught for selected days during the month of November. He reported the following:
11/1 7500 lbs
11/5 8900 lbs
11/8 5400 lbs
11/15 6800 lbs
11/18 8900 lbs
11/25 9500 lbs
11/28 4200 lbs
What is the minimum catch for November?
4200
Lt. Dan is a shrimp fisherman, and he had asked you to help him determine the range of the pounds of shrimp he caught for selected days during the month of November. He reported the following:
11/1 7500 lbs
11/5 8900 lbs
11/8 5400 lbs
11/15 6800 lbs
11/18 8900 lbs
11/25 9500 lbs
11/28 4200 lbs
What is the range of the catch for November?
5300
Lt. Dan is a shrimp fisherman, and he had asked you to help him determine the best way to show a graph of the shrimp he caught for the month of November. He reported the following catch figures:
11/1 7500 lbs
11/5 8900 lbs
11/8 5400 lbs
11/15 6800 lbs
11/18 8900 lbs
11/25 9500 lbs
11/28 4200 lbs
What is the best way for Lt. Dan to chart this data? Why?
The best way to chart this data would be using an excel workbook.
A B C D E F G
1 Date: Pounds: Total Average= Total Median= Total Maximum= Total Minimum= Total Range=
2 11/1 7500 =AVERAGE(B2:B8) =MEDIAN(B2:B8) =MAX(B2:B8) =MIN(B2:B8) =E3-F3
3 11/5 8900 =7314 =7500 =9500 =4200 =5300
4 11/8 5400
5 11/15 6800
6 11/18 8900
7 11/25 9500
8 11/28 4200
Albert is trying to compute his GPA for the Fall semester. He earned the following grades:
Business Math 3 credit hours Grade of A
Computer Applications 3 credit hours Grade of A
Introduction to Logic 4 credit hours Grade of B
Modern Philosophy 2 credit hours Grade of C
What is Albert's GPA for this term? Use a 4.0 scale (A=4 points, B=3 points, etc.)
3.33
Which of the following are measures of central tendency?
mean, median
Which of the following are measures of dispersion?
radian, standard deviation
What is standard deviation?
A measure of the spread of data around the mean
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